Kim Hok Yung and Others v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank) (Lee Mon Sun, Third Party)

• Jurisdiction: Singapore
• Judge: Choo Han Teck JC
• Judgment Date: 08 July 2000
• Neutral Citation: [2000] SGHC 134
• Docket Number: Suits Nos 1676 and 1830 of 1999
• Date: 08 July 2000
• Published date: 19 September 2003
• Year: 2000
• Plaintiff Counsel: Woo Tchi Chu, Lim Sin and Julia Yeo (Robert WH Wang & Woo)
• Citation: [2000] SGHC 134
• Defendant Counsel: Ashok Kumar and Marcus Yip (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Whether claim intrinsically weak hopeless case,Striking out,Pleadings,Allegation of fraudulent misrepresentation,s 2(1) Misrepresentation Act (Cap 390),Whether sufficient particulars of fraud set out,Whether alternative plea of innocent misrepresentation applicable to pleading of fraud,Whether claim frivolous or vexatious,Alternative plea of innocent misrepresentation,Civil Procedure

: The three plaintiffs were former employees of Barclays Capital Securities Asia Ltd (`Barclays`). The first plaintiff was employed at Barclays` office in Singapore as the Director of Derivatives. The second and third plaintiffs were employed by Barclays` Hong Kong office as the Assistant Director of Derivatives, and Associate Director of Equity Derivative Sales respectively. The defendants are an off-shore bank operating in Singapore. Initially, two separate suits were commenced by the plaintiffs against the defendants, but the suits were subsequently consolidated. The claim by the plaintiffs is for damages for fraudulent misrepresentation and alternatively under s 2(1) of the Misrepresentation Act (Cap 390) (innocent misrepresentation). The defendants applied to strike out the consolidated statement of claim under O 18 r 19 of the Rules of Court. Mr Ashok Kumar appearing for the defendants relied on all four grounds of this rule, namely, that the claim:

(a) discloses no reasonable cause of action;

(b) is scandalous, frivolous or vexatious;

(c) may prejudice, embarrass or delay the fair trial of the action; and

(d) is an abuse of the process of the court.

The consolidated statement of claim is 64 pages long, much of which was devoted to the recital of representations allegedly made by or on behalf of the defendants. The plaintiffs say that all those representations were false and made with the knowledge that they were false or without a reasonable belief that they were true.

The plaintiffs` claim is that sometime in November 1997 the defendants intimated to them that they (the defendants) have taken steps to establish an investment banking business in the Asia-Pacific region and the expertise of the plaintiffs were required to participate in this business. The plaintiffs say that in order to induce them to leave their jobs at Barclays the defendants made the representations set out in the statement of claim. It is only necessary to set out a few of them to appreciate the nature and character of the representations. For convenience I shall only refer to the first five representations as pleaded at page three of the amended consolidated statement of claim:

(1) that the defendants had decided and had begun implementing a plan to establish in the immediate future in Asia, including Japan and Australasia, ie Australia and New Zealand (`the Asia-Pacific Region`), and investment banking business in the true and commonly understood sense of the word within the banking and financial industry, ie the engagement in capital markets business in equities and/or fixed income securities, with sales and trading in these securities and their derivatives supporting these capital market activities (`True Investment Banking Business`);

(2) that a credit and equity derivatives sales and trading business including arbitrage trading would be an important component of the defendants` aforesaid True Investment Banking Business in the Asia-Pacific Region;

(3) that the credit and equity derivatives sales and trading business, including arbitrage trading, of the defendants in the Asia-Pacific Region would be conducted and coordinated through a formal consolidated desk of traders, marketers and support staff (`the Desk`);

(4) that the Desk would have ultimate and exclusive authority, management and control over all of the Defendants` sales and trading of equity and credit derivatives, including arbitrage trading, in the Asia-Pacific Region;

(5) that the defendants were fully committed to the plan of establishing in the Asia-Pacific Region a True Investment Banking Business in general, and a credit and equity derivatives sales and trading business, including arbitrage trading, and hence the Desk, in particular; and had, as an indication of their commitment to this plan, already budgeted and allocated a sum of United States Dollars (`USD`) 80 million over three years for systems development and staff recruitment for the Asia-Pacific Region to establish the Desk along with the other investment banking lines of businesses;

Mr Kumar`s first complaint was that the statement of claim fails to set out particulars of the fraudulent intention on the part of the defendants. He drew my attention to the unreported case of Tan Boon Hock v Aero Supplies Systems Engineering Pte Ltd (Suit 2151/90) in which the elements necessary to maintain an action in the tort of deceit were enumerated by the learned judge LP Thean JA; one of the said elements being the requirement to set out particulars of the alleged fraudulent intent. The gist of Mr Kumar`s argument was that it is a weak voice that cries fraud without uttering details of the fraudulent design. As a matter of principle I agree with him entirely. A false statement is not necessarily a fraudulent statement in the context of fraudulent misrepresentation. There are innocuous reasons why a person might have made a statement that turns out to be untrue. A fraudulent misrepresentation is a representation made by a person knowing that it was false or so recklessly uncaring as to whether it was true or not. So Mr Kumar submitted that the plaintiffs ought to state the details and basis sufficient to pin the tag of fraud on the representations alleged to have been made by or on the defendants` behalf.

The plaintiffs` case was argued by Miss Yeo (assisted by Mr Lim), and, on the second day of arguments, by Mr Woo. Miss Yeo submitted that the statement of claim adequately provided all necessary details. The only relevant part reads as follows:

7 All the representations to the first plaintiff were made by the defendants, their aforementioned servants and/or agents:

(a) knowing that they were false,

(b) without any belief in their truth,

(c) recklessly, without care as to whether they were true or false.

The question that must be asked is this: Would the defendants know what case it is that they have to meet from this pleading? They may be fully aware that the allegations must be challenged, but what would they say to the crucial part that accuses them of having made those representations fraudulently? If they are to be given a fair chance of refuting that element details of the alleged fraudulent intent must be provided. In the context of this case, I would expect, for example, a statement setting out the defendants` knowledge of some specific fact or facts, or the existence of some specific fact or circumstances which were clearly contradictory and inconsistent with the representations made by them. Otherwise, the pleading is no more...